Why service problems are a cost problem — and why you probably don’t have to switch
“They’re on notice.”
That’s how a buyer described one of their suppliers on a call recently. Not “we’re renegotiating.” Not “their pricing is out of line.” On notice — the phrase you’d use for an employee you’ve already half decided to let go.
What made it notable wasn’t the frustration. It was that nobody asked. We were there to talk about pricing. Service came up on its own, early, and without prompting.
That happens more than you’d expect.
Price is what gets measured. Service is what gets endured.
Walk into almost any organization and ask how they manage supplier relationships, and you’ll hear about pricing. What we paid last year, what we’re paying now, whether we benchmarked it. That’s the part with a number attached, so that’s the part that gets reviewed.
Service rarely gets the same treatment. It gets absorbed. It shows up as a running complaint in operations that never quite escalates into a decision.
It usually sounds like some version of this:
- The account rep who actually understood the business left, and the replacement was never properly introduced
- Orders arrive short, late, or wrong often enough that someone has built a workaround around it
- A billing error takes four emails and two phone calls to resolve
- There’s no escalation path, or there is one and it goes nowhere
- Nobody at the supplier can answer a question about the account without going to look it up
Every one of those is a cost. None of them are on the invoice.
Service failure is just cost wearing a different hat
Here’s the part that gets missed: when a supplier doesn’t perform, the cost doesn’t disappear. It moves.
An order that doesn’t show up gets fixed by somebody. It gets fixed with rush freight. With a spot buy from whoever can get it there tomorrow, off contract and at whatever price is on the screen. With overtime. With a line sitting idle. With a staff member spending hours a month chasing something that should have simply arrived.
The supplier’s unit price didn’t change. Your cost of getting the item did — and it went up, quietly, in a budget line nobody connects back to that supplier. There’s a second-order effect too. Repeated service failures are one of the most reliable ways an organization teaches its own people to buy around the system. Once a team learns that the approved supplier can’t be counted on, they stop trying. That’s how off-contract buying becomes normal, and it rarely gets traced back to where it started.
Why nobody does anything about it
The honest answer is that the alternative feels worse.
Switching a supplier you depend on is disruptive. It’s also political — these relationships often have history, and sometimes a champion. A buyer we spoke with called them “sacred cow vendors,” which is about as accurate a description of the problem as we’ve heard.
So the calculation most people run is: yes, this is frustrating, but is it frustrating enough to be worth the fight? And the answer, usually, is no. So it continues. For years.
The good news: switching usually isn’t the answer
This is where we’d push back on the assumption baked into that whole calculation.
Most of the time, the incumbent can be fixed. In our experience, a supplier who knows their position is genuinely being evaluated behaves differently — and quickly. The leverage was always there. It just was never used, because nobody had put the relationship on the table in a structured way.
What changes things is making service concrete. That means it stops being a feeling and becomes a term:
- A named account team, with a named backup, and a commitment that turnover triggers an introduction rather than silence
- Response and resolution times for orders, quotes, and billing issues
- Fill rate and on-time expectations, written down, with a way to measure them
- A real escalation path — who, how fast, and what happens if it stalls
- A standing review where performance gets looked at on a schedule, not only when something breaks
None of that requires changing suppliers. All of it requires deciding that service is worth specifying, the same way price is. And when a new supplier genuinely is the right answer, that same discipline is what makes the next relationship different from the last one.
Where we come in
When we analyze a company’s indirect spend, we’re looking at pricing, category by category. But we ask about service too, because the two aren’t separable — a great price on an item that shows up late is not a great price.
Here’s what that looks like in practice.
A multi-location retailer — a handful of main facilities plus dozens of storefronts — had printers at every site producing materials that went out with customer orders. They had tried a managed print arrangement once before and couldn’t get the service they needed, so they had fallen back to the simplest option available: lease the equipment outright and let the internal IT team keep it running.
That’s a reasonable response to being let down. It’s also expensive in a way that never appears as a printing cost. IT was absorbing maintenance calls, chasing toner, and troubleshooting equipment at sites they couldn’t walk to — time taken directly out of the work they were actually hired to do.
What changed the outcome wasn’t simply finding a different vendor. It was deciding, in advance, what service had to look like. The new managed print agreement came with a ticketing system for issues, assigned technicians for maintenance, and a semi-annual service schedule built around the company’s busy periods — so equipment gets prepared ahead of the crunch instead of failing during it. It also put numbers on the things that had been vague before: a cap on downtime hours, defined response times, and toner usage tracking so replacements arrive before a cartridge runs dry.
Same category. Same underlying need. The difference is that this time, service was a term in the agreement rather than a hope.
The IT team is spending meaningfully less time on printers now. That time didn’t disappear — it went back to work that matters more.
ACC finds money in indirect spend nobody was looking at. A surprising share of it is hiding in relationships everyone already knows aren’t working.
If you’ve got a supplier you’d describe as “on notice,” that’s worth a conversation.
